Every day we hear that more supply chain leaders are being tasked with taking over the management and control of their healthcare organization’s purchase services. This mission critical strategy makes good sense to us since purchase services account for 40-45% of a hospital, system, or IDN’s total non-salary spend, even for small rural healthcare organizations. This category of purchase has big savings opportunities for any healthcare organization that can’t be ignored any longer.
It Should Be a “No Brainer” to Centralize This Category of Purchase
It should be a “no brainer” for a hospital, system, or IDN’s senior management to want to tap into their expertise for purchased services as supply chain facilitates and negotiates hundreds of supply contracts each year. The alternative is to leave these purchase service contracts flapping in the wind, since customarily, healthcare department heads and managers have done a very poor job of managing and controlling these long-term multimillion-dollar commitments for decades.
4 Top Reasons for Supply Chain Leaders to Take More Responsibility for Their Purchase Services
Now that supply chain leaders are being asked to assume more control of their healthcare organization’s purchase services, here are four top reasons why supply chain leaders should welcome this new responsibility:
- Time, Knowledge, & Peoplepower: Who said your department heads have the time, knowledge, and peoplepower to manage and control their purchase service contracts? Furthermore, being untrained to do so, just one error by these individuals can cost your healthcare organization hundreds of thousands of dollars. This isn’t theoretical, these costly purchase service mistakes are happening every day.
- Centralized Contracting Administration: You already have a process for your healthcare organization’s contract administration. All you need to do is to piggyback this process on every new purchase service contract that you will be responsible for, as opposed to having each of your department heads and managers handling some facet of your decentralized contract administration system.
- Return-on-Investment: Our estimate of the ROI for supply chain leaders taking over their purchase services management would be a minimum of 10:1, since this category of purchase is so poorly managed and controlled by your department heads and managers today.
- Better Systems: When a healthcare organization centralizes their purchase service efforts under supply chain you then can justify advanced systems to monitor, manage, and control your hospital, system, or IDN’s multimillion-dollar portfolio of purchase service contracts.
Let’s face it, every healthcare organization within the next five years will be handing over their purchase service management to their supply chain leaders to manage and control because it is a best practice to do so. So, if you are one of the 54% of supply chain managers who hasn’t already been given this responsibility, what are you waiting for?